Finance Committee on Nov. 19th, 2025

I will focus primarily on the points you have raised, while staying within the allotted times.

First, very briefly, I would refer you to my book: Canada: A New Tax Haven, which tells the story of how the most controversial tax havens in the British Caribbean, namely the Cayman Islands, the Bahamas, Trinidad and Tobago, and the rest, are creations of Canada.

Canada was very influential in the British Caribbean. Canadians, and often the Canadian government itself, created tax havens in the Caribbean from scratch. We cannot then pretend to be unaware of what they are used for. Historically, sadly, we are their architects. This is Canada’s historical legacy.

Tax havens later came up due to a double taxation treaty with Barbados in 1980 as well as other factors. This treaty would make sense if it were signed with a country that has a tax rate similar to Canada’s. Bombardier can very well do business with partners in Germany, where it has operations, reap profits and transfer funds to Canada in the same year and tell the Canadian government that it has already been taxed in Germany at a legitimate and considerable rate and should therefore not be taxed a second time.

What is the motivation for a country like Canada to sign an agreement with Barbados, where the maximum tax rate is 1% and a double taxation treaty that allows financial funds to circulate in a completely artificial circuit, where funds are artificially transferred to Barbados? The funds are barely taxed there, and they come back to Canada, and a company can claim that these funds have already been taxed and should not be taxed a second time.

Canada makes these loopholes possible. Unless it takes us for fools, Canada cannot turn around and pretend not to understand what is happening internationally and tell us that we must engage with the OECD to develop a comprehensive framework that harmonizes the complex tax systems of approximately 200 jurisdictions.

Bloc

Mario Simard Bloc Jonquière, QC

Earlier in your presentation, you spoke about political and diplomatic solutions. My colleague, Mr. Leitão, revisited that point. However, in closing, you spoke about taxes on the consolidated balance sheet.

What did you mean by that? Could you elaborate?

Professor, As an Individual

I simply believe that we need to move beyond 19th‑century thinking when it comes to tax policies and recognize multinationals as a single entity. Often, depending on what we are talking about, a multinational does not exist in law. What exists is a myriad of entities that are independent of each other and can trade with each other, borrow from each other, even sue each other and go completely mad. The board of directors co-administers all these structures, which are independent of each other and depend on the country where they are registered.

Now, if we wanted to enter the 21st century with a taxation system in step with the times, we could simply devise a method of calculation based on capital, number of employees and turnover, and then tax a multinational company directly on its estimated share of income in our country. In proportion to its presence in our country, it would owe our tax authority a certain percentage of its consolidated balance sheet, meaning of all its entities combined, regardless of whether the funds are in Hong Kong, Bermuda or Luxembourg.

This method presupposes a politically driven intent, coupled with a technical approach that specialists are well equipped to articulate.

Bloc

Mario Simard Bloc Jonquière, QC

Are there currently any states that apply such measures?

Professor, As an Individual

I don’t know of any, but I see that Mr. Ward is nodding, so I’ll let him answer.

However, it is often said that we need to be part of a critical mass, otherwise we cannot act. Personally, I think we could put in place minimum legislation, meaning that the Government of Canada could pass a law stating that it will tax companies based on their consolidated balance sheet, and that this law will come into effect on the day that a certain number of countries in the Organisation for Economic Co-operation and Development, representing a certain percentage of the overall population, pass a similar law.

Liberal

The Chair Liberal Karina Gould

Thank you, Mr. Deneault. We have to stop here for now.

We're going to continue now for five minutes with Mr. Lawrence from the Conservatives.

Conservative

Philip Lawrence Conservative Northumberland—Clarke, ON

Thank you.

My questions will be mostly for Mr. Ward.

Mr. Ward, in your previous testimony at Ethics, I believe you agreed with the following statement. Please tell me if you still agree: Brookfield has been, over the last five years, one of Canada's most notorious and largest tax avoiders. Is that still your belief?

Principal Analyst, Centre for International Corporate Tax Accountability and Research

That is still my belief, yes.

Conservative

Philip Lawrence Conservative Northumberland—Clarke, ON

Okay.

Would I also be accurate in saying that from 2021 to 2024 there was about $23 billion U.S. profits reported, but Brookfield paid only $2 billion, with an effective rate of about 8%, and if that money were reported in Canada, there would be a 26% tax rate? Is that correct?

Principal Analyst, Centre for International Corporate Tax Accountability and Research

Yes. I mean, there are legitimate reasons why companies pay less than the statutory rate, but in the case of Brookfield, this is a pattern over a long period of time, which strongly suggests very aggressive tax avoidance. The use of tax havens in Bermuda, particularly by Brookfield, is very clear and apparent.

Conservative

Philip Lawrence Conservative Northumberland—Clarke, ON

Thank you.

In 2020, Prime Minister Mark Carney became co-chair of the Bermuda registered fund for Brookfield. From 2020 on, do you have any evidence that Mr. Carney attempted to reduce the excessive use of tax havens?

Principal Analyst, Centre for International Corporate Tax Accountability and Research

I have no evidence that Brookfield or Mr. Carney attempted to reduce the use of tax havens, and the tax haven usage by Brookfield has continued wholeheartedly. That has impacted tax payments by Brookfield-owned or -controlled companies, both in Canada and in countries all around the world. I can give you numerous examples from Australia and many examples from Brazil and across Latin America where that's been the case.

Conservative

Philip Lawrence Conservative Northumberland—Clarke, ON

Thank you.

I come from a rural riding, so you'll have to excuse this country analogy. We would say that in this situation it looks a lot like the fox is actually guarding the henhouse here, in that we have an individual who presided over the usage of tax havens in an extraordinarily large amount. Now, he even still holds shares, or one would believe that he still holds shares, in a blind trust of Brookfield's, where he actually stands to make money if they continue to use tax havens.

With that in mind, have you seen any serious or significant efforts made by the federal government since Prime Minister Carney became elected prime minister to combat the use of tax havens?

Principal Analyst, Centre for International Corporate Tax Accountability and Research

No, I have not. I will say it was a really backward step for the G7 when it met in Canada to exempt U.S. multinationals from the OECD's pillar two minimum tax, which was deeply flawed but a small, positive step in the right direction.

I agree with Professor Deneault that the OECD is another example of putting the fox in charge of the henhouse. The secretary-general of the OECD was a long-serving finance minister in Australia who sought to reduce corporate tax payments in Australia. He was the head of TaxNow and is also a former adviser to KPMG, which sold Microsoft a scheme of avoiding tax in Puerto Rico which is now the largest tax bill in the world's history. The U.S.'s IRS, prior to Trump, has been chasing Microsoft for $30 billion in taxes because it shifted profits to Puerto Rico, which, under U.S. law, is a foreign jurisdiction.

We've done work in Canada that shows that Microsoft has done the same in Canada in shifting profits—maybe not to Puerto Rico, but via Ireland. There are lots of countries, like Ireland, Luxembourg and the Netherlands, that are also tax havens. Canada, the United States and the U.K. also function as tax havens.

Conservative

Philip Lawrence Conservative Northumberland—Clarke, ON

In your testimony, you talked about the Australian example of having reporting of foreign income made public, if I have that correct. Have you tried to socialize that with the current federal government? What response have you received?

Principal Analyst, Centre for International Corporate Tax Accountability and Research

We have talked to our friends and allies in Canada about pushing forward proposals on public, country-by-country reporting. I haven't been involved in direct conversations with the government, but we have been talking to our allies and friends in Canada to push that with the government.

My understanding is that there was an openness to that consideration, but I can't speak to that because I have not been directly involved in those conversations. I will say—

Liberal

The Chair Liberal Karina Gould

I'm sorry, Mr. Ward. We're going to have to end it there.

Thank you, Mr. Lawrence.

We're going to continue for five minutes with Mr. Sawatzky, please.

Liberal

Jake Sawatzky Liberal New Westminster—Burnaby—Maillardville, BC

Thank you, Chair.

Thank you to the witnesses.

Professor Deneault, Canada has adopted the OECD's common reporting standard and strengthened the general anti-avoidance rules. Could you comment on whether these have been effective in your view? Were they done in the best way to crack down on the offshore tax havens?

Professor, As an Individual

I reiterate that, at best, these measures are slightly effective in that they can only change a few variables and, at worst, they are cosmetic. I am not using all the technical terms, but I can provide them to you in writing.

With regard to Canada’s tax information exchange agreements, as I mentioned earlier, Canada has made a regulatory change to ensure that transactions subject to mandatory information transfers are legalized by the Canadian government. In fact, we are legalizing the ability of beneficiaries to receive assets transferred to a tax haven that signs a tax information exchange agreement in the form of dividends.

This means that, as the minister himself said at the time, we need to find incentives for tax havens to co-operate with us. That is essentially what I understand from what he said. If we want to tackle tax havens, we need to consider the scale of the problem. This is not a technical issue that requires minor adjustments here and there; it is a fundamental problem that affects Canada’s very ability to fulfill its social mission.

Do politicians want this? Are they embarrassed that Canadians don’t have family doctors, that there is mould in schools, that poverty is on the rise, that there are no environmental programs, that our train service is so poor that travelling by train feels more like a journey into the past than a step towards the future, that our society is eroding? Are Canadian leaders ashamed that they cannot fund public institutions because they do not have the courage to tax businesses properly, in accordance with the spirit of the law? Have we reached a point where we are burying our heads in the sand and telling ourselves that it is only a technical issue and that we have signed a more or less insignificant agreement with a particular state?

Liberal

Jake Sawatzky Liberal New Westminster—Burnaby—Maillardville, BC

Thank you for that.

Maybe you could also summarize what you think would be the best step forward in terms of increasing laws and being able to do more.

Professor, As an Individual

I reiterate the key measures.

Technically, it is about the state’s ability to tax multinationals on the basis of their consolidated balance sheet, and not just their structures registered in the country. Every year, multinational corporations report to their shareholders on a balance sheet that is somewhat artificial in that it presents the combined capital and revenues of all the entities in the group, even though the group has no legal existence.

Legally, a multinational corporation is much like the fictional Santa Claus. These entities are distinct and independent entities. We should have the theoretical and conceptual capacity to say that a multinational corporation exists legally. It is incredible that we have to fight for this in 2025, but that is where we are. Considering the existence of multinational corporations should be a matter of law. Multinational companies should be summoned as such. If we could stop engaging the small subsidiaries here and there as though they operated independently, we might make some progress, at least within this scope.

The law would then apply to all of its activities, not just fragmented ones. It is as if, as an individual, I split myself into 3,000 pieces and told you that if you want to talk to me, you have to talk to 1/3000th of me. We would see what would happen. Yet this is what you, as legislators, are allowing multinationals to do. Ultimately, it is your responsibility.

Liberal

Jake Sawatzky Liberal New Westminster—Burnaby—Maillardville, BC

Thank you.

We've had some previous witnesses mention how sometimes statements of public income can raise privacy concerns and sometimes even increase the risk of kidnapping and that sort of thing.

Can you comment on that? Are there any ways we can mitigate those concerns?

Liberal

The Chair Liberal Karina Gould

Unfortunately, we'll have to hear your response another time because that concludes the five minutes.

Mr. Simard, you have the floor for two and a half minutes.

Bloc

Mario Simard Bloc Jonquière, QC

Thank you very much.

I hope I’m not talking to 1/3000th of you, Mr. Deneault.

I really liked your discussion on the disappearance of public services. That leads me to ask you a question that may seem silly, but which I think is relevant. Who really contributes to government coffers?

Today, cynicism is on the rise, and people feel they are paying too much tax for the services they receive. In your presentation, you talked about social costs, dumping, the impact on debt and most importantly, the disappearance of public services. I now have a better understanding of the extent of public cynicism towards public services.

This leads me to a simple question: Today, who really contributes to government coffers?

5:15 p.m.

Professor, As an Individual